Archive for July, 2014

New Advice: Employees Paid By Commission

Tuesday, July 15th, 2014

There is a recent European Court Ruling which stated that a worker’s right to be paid annual leave was infringed when his future remuneration was reduced because he had been unable to earn commission while on holiday.

What this means is, when an employee’s take home pay includes a significant element of commission they should not be paid on just purely their basic when away on holiday, but their holiday pay should reflect both basic pay and commission. The majority of employers pay just basic pay when an employee is on annual leave so the potential impact and cost of this ruling is huge.

For example, a salesperson earning £10k commission per annum with the statutory 5.6 weeks holiday entitlement would result in circa £1k additional holiday pay. The higher the commission the higher the liability.

All employees who fall into that category could make a claim, and the claims could go back up to 6 years so therefore the above example with an employee who had worked for 6 or more years would be in excess of £6k. Also in terms of any staff who have been employed for less than 6 years, failure to act now may mean that their entitlement continues to go on and on.

The above will probably be highlighted in the press soon and legal companies will try to encourage staff to make claims.

We recommend if you fall within this category you act now to mitigate any potential claims and consider all of your options.

This is a legal issue, however we can put you in touch with an employment solicitor if you need assistance.